Restaurant business loans

Which loans work best for restaurants?

Equipment financing works best for ovens, hoods, walk in coolers and espresso machines, because the lender can resell the equipment. SBA 7(a) is the main bank path for openings, buyouts and renovations, and restaurants are one of the most common SBA industries. Merchant cash advances fund fastest, usually within days, and repay as a percentage of card sales.

• Equipment: 2 to 7 years, 0% to 20% down, typically 7% to 25% APR.
• SBA 7(a): up to $5 million, 10 year terms for working capital.
• MCA: factor rates of 1.2 to 1.5, repaid daily or weekly.

For a slow month, a short term loan is often cheaper than an advance.

What do lenders like and dislike about restaurants?

Lenders like card heavy sales, because processing statements verify revenue, and a lease with several years left. They like an owner with prior restaurant experience and a second location that already makes money.

They dislike the failure rate, the thin margins, and the way cash sales hide true revenue. A restaurant with $60,000 a month in deposits but three NSF days is harder to fund than one with $35,000 and clean statements. Short leases, seasonal locations and stacked advances all push lenders away, and full service dining is seen as riskier than quick service.

How much can a restaurant borrow?

Working capital products typically lend 50% to 100% of one month of revenue, so a restaurant doing $50,000 a month can usually get $25,000 to $50,000 from an advance or short term lender. Equipment lenders fund the invoice, typically $5,000 to $500,000, with a down payment for weaker credit. SBA 7(a) can reach $5 million, but the amount is sized by cash flow: projected profit must cover the payment with about 1.25 times to spare. The how much can I borrow tool gives a rough range.

What documents will you be asked for?

Advance and short term lenders usually want 3 to 6 months of bank statements, card processing statements and a driver license. Equipment lenders add the vendor quote. SBA and bank lenders want more:

• Two to three years of business and personal tax returns
• Year to date profit and loss and balance sheet
• The lease, health permit and liquor license if you hold one
• Point of sale reports by month
• A plan and projections for an opening
• Purchase agreement and seller financials for a buyout

The full list is in the document checklist.

What are the common uses of funds?

Most restaurant loans pay for one of five things.

• Kitchen equipment: a $40,000 hood and line replacement financed over five years.
• Renovation: an SBA 7(a) loan for a $300,000 dining room and patio refresh.
• A second location: see opening a second location, where the first unit's profit carries the application.
• Working capital: a $30,000 short term loan to cover January after a strong December.
• Buying a restaurant: an SBA acquisition loan with 10% down and a seller note.

What usually gets a restaurant application declined?

The most common decline reasons are declining card sales over the last three months, more than three NSF or negative balance days, and a lease that expires within a year. Lenders also decline on two or more existing advances, unpaid sales tax, or a restaurant open under six months. For banks, add a personal credit score under about 650 and a profit and loss that shows a loss after owner salary. Read why loans get denied and fix what you can first, because each application is pulled and counted.

How to apply

Apply once on this site with your bank statements and basic details and your application reaches equipment, SBA, advance and short term lenders at the same time. Or connect your AI assistant to our MCP server through the agents hub and it can read your statements, fill the application and submit it for you. It is free for the business, and offers come back to the same place.